Congress likely to revive NASCAR tax break

May 4, 2014|By Mark K. Matthews, Washington Bureau

WASHINGTON — The Daytona Beach company that owns the city's famous NASCAR racetrack is poised for another come-from-behind tax victory in Congress — a potential win that already has some budget hawks seething.

Until recently, racetrack owners such as International Speedway Corp. benefited from a longstanding perk in the tax code that let them deduct the cost of improving their stadiums at a rate much faster than other businesses.

It's a benefit that officials of International Speedway Corp. said can be worth "$10 million or so in a given year" and helps pay for projects such as Daytona Rising, the current $400 million renovation of the Daytona International Speedway.

The racetrack provision expired at the end of 2013, along with more than 50 other tax breaks. Last month, however, the Senate Finance Committee approved legislation that would resurrect most of the breaks that expired, including the racetrack provision, through 2015.

Fiscal conservatives hoped that these so-called tax extenders — so named because Congress has to frequently extend them — might disappear after years of defying death.

"Tax extenders are the cockroaches" of Washington politics, said Steve Ellis of the watchdog group Taxpayers for Common Sense. "They can't be killed. If we have nuclear Armageddon, we'll still have cockroaches and tax extenders around."

Despite its controversy, the racetrack provision represents only a fraction of the cost of renewing the tax extenders — about $71 million over 10 years, according to congressional documents.

"I think our provision gets a lot of focus and notoriety because it tends to be a little sexy," said Dan Houser, chief financial officer for International Speedway Corp. But "when you look at the dollars involved, from a federal budget standpoint … it's pretty insignificant."

A report by the Congressional Research Service, an arm of the legislative branch, estimated that the dozens of provisions in the Senate bill would "reduce federal revenues by $85.3 billion" through 2024. Among the breaks are a tax extender that benefits rum producers in Puerto Rico and the U.S. Virgin Islands and another that allows restaurants to claim an "enhanced charitable deduction" on their taxes when they donate food.

Meanwhile, the House Ways and Means Committee decided recently to make six of the extenders permanent — though not including the motorsports break. The panel is expected to consider more extenders later this session.

Congress might not make a decision until after the November election, since approving a raft of tax extenders in a lame-duck session is less hazardous politically.

"This bill is mainly a hodgepodge of special-interest earmarks in the federal tax code," wrote Andy Roth, vice president of government affairs for the Club for Growth, in a recent email to congressional staff.

The conservative group opposes the Senate bill, and Club for Growth president Chris Chocola highlighted the racetrack provision as part of the "annual special-interest orgy known as the 'tax extender' legislation" in a recent op-ed piece in The Wall Street Journal.

Houser said the tax advantage given to his company, which owns or operates 13 motorsports venues, is no different from a similar, permanent tax exception given to theme parks, which also wear out their facilities in short order. In both cases, the companies can quickly write off new assets over seven years instead of waiting as long as 39 years, which frees up more money in the short-term.

Yet it's enough of an advantage that International Speedway has fought hard to keep it — both through lobbyists and campaign contributions.

In the first three months of 2014, International Speedway spent $100,000 on lobbying, according to federal lobbying disclosure forms. "Tax treatment of motorsports facilities" was listed as one reason.

Company officials also have frequently opened their wallets for lawmakers during the campaign season, though not necessarily to garner support for the tax provision.

CEO Lesa France Kennedy has contributed at least $182,000 to federal candidates in both major parties since 1998, according to federal campaign records. So has board Chairman James France, who has given at least $186,000 to both Republicans and Democrats over the years.

One recipient of campaign funds from employees at International Speedway Corp. was U.S. Sen. Bill Nelson, D-Fla. In response to questions about the racetrack provision, his office released a statement in support.

"Sen. Nelson doesn't believe every single tax incentive is bad," the statement read. "In this case, you're talking about an industry that brings a lot of money and jobs into the state — and, a good argument can be made for an incentive that actually results in a boost to the region's economy."